Study: Decline In Coal Coming
WHEELING –A study released Thursday suggests falling solar power costs will cause demand for coal to decline after 2020.
The report co-authored by the Carbon Tracker Initiative and the Grantham Institute at Imperial College, both based in London, also shows oil demand will remain steady through 2030 before it drops. The projected fall in oil demand follows price declines for electric vehicles, such as the Tesla.
The study also comes as officials with Consol Energy — which sold five West Virginia coal mines to Murray Energy Corp. for $3.5 billion in 2013 — confirm they are looking to unload their remaining coal operations, which include the Harvey, Enlow Fork and Bailey mines in western Pennsylvania.
“We think there may be a market opportunity to achieve a sale of the coal business on favorable terms or, alternatively, to effect a spin-off as our leverage ratio comes down to a level that allows each business to stand on its own,” Consol Chief Financial Officer David Khani said in the company’s earnings statement this week.
The power and road transport sectors account for approximately half of fossil fuel consumption, so growth in solar power and electric vehicles can have a major impact on coal and oil demand, the Carbon Tracker study argues.
“Electric vehicles and solar power are game-changers that the fossil fuel industry consistently underestimates,” Carbon Tracker senior researcher Luke Sussams said. “Further innovation could make our scenarios look conservative in five years’ time, in which case the demand misread by companies will have been amplified even more.”
Researchers released the study as coal industry leaders celebrated efforts by congressional Republicans, which accompany promises by President Donald Trump, to overturn the Obama administration’s Stream Protection Rule, which some coal operators believe would make longwall mining impossible.
“The Stream Protection Rule was a regulatory death sentence for underground and surface coal mining in the United States, particularly Appalachia,” West Virginia Coal Association President Bill Raney said. “Overturning it is a must, so we applaud our elected representatives for moving quickly to make that happen.”
“The alleged Stream Protection Rule was never about the environment and was always about carrying out the previous administrations radical anti-coal agenda. If implemented the rule would have killed thousands of jobs, while depriving families’ access to affordable energy,” Ohio Coal Association President Christian Palich added.
Trump has promised to help unemployed miners get back to work, although data from the Mine Safety and Health Administration show companies continue the decades-long trend of producing more coal with fewer employees because modern technology allows the average employee to do more work.
“We now have someone in the White House who understands and respects our industry,” Raney said. “President Trump knows that America — and West Virginia — needs the coal industry. It’s time for us to start rebuilding after eight years of negative policies.”
However, the Carbon Tracker Initiative and Grantham Institute report shows major energy companies are seriously underestimating low-carbon advances with a business-as-usual approach — and that stranding of fossil fuel assets is likely as the low-carbon transition gathers pace.
The study shows coal demand could peak in 2020 — and fall to half about half of its current level by 2050. It indicates the market for oil could be flat from 2020 to 2030, before falling steadily to 2050.
Growth in electric vehicles such as Teslas alone could lead to 2 million barrels of oil per day being displaced by 2025, the report shows.
“There is no more business as usual in the energy sector – so it is time that scenario was discarded. There are a number of low-carbon technologies about to achieve critical mass decades before some companies expect,” James Leaton, head of research at Carbon Tracker, said.
Environmental groups don’t appear to be abandoning their efforts to restrict the use of coal, either.
“The Stream Protection Rule was a common sense safeguard that provided the monitoring of streams near coal mining operations-many of which feed into drinking water sources-for pollutants such as lead, arsenic, selenium, and manganese,” Earthjustice Associate Legislative Representative Jeni Collins said Thursday. “This does not mean that the problem of water contamination from coal mining has gone away, and we will continue to fight with communities from Appalachia to Alaska for the protections they deserve.”